New vehicle sales boom

May was another record-setting month for new vehicle sales in New Zealand.

The Motor Industry Association (MIA) says 11,180 vehicles were registered last month. That was an increase of 11 percent from the same month last year.

It was the strongest May for vehicle sales since the industry began keeping records in 1975.

"Strong net immigration continues to be a key driver of increased registrations of new vehicles, along with Auckland's booming regional economy," the MIA says.

The strong numbers were released on the same day that economists at both ANZ and Westpac banks suggested the economy might be strong enough for the Reserve Bank to hold off from cutting interest rates next week.

The construction industry is helping boost vehicle sales. The top three sellers were all double-cab utes.

ANZ believes the RBNZ will pause for a "tea break" when it reviews the official cash rate next week.

The Official Cash Rate is currently 2.25 percent.

ANZ says the domestic economy is still solid, core inflation is rising and it looks like wages are too, and the global economy "doesn't appear at the precipice like it did earlier in the year".

Then there is the housing market.

"For the RBNZ to be noting financial stability concerns from housing at the same time as cutting would be contradictory to say the least. The 'what is the bigger risk' pendulum has swung away from dairy and back towards housing," ANZ says.

ANZ says it will also be looking for signals next week that RBNZ might be considering making no more cuts at all this year.

Westpac believes a rate cut is a 50-50 call next week.

On balance its economists believe the OCR will remain "on hold", with Westpac forecasting a final cut in august to two percent.